Best practice property investment

By Donna Smith, Investment Director, Connells Group

Investment in bricks and mortar has long been a national obsession, whether you are looking for a home to live in or to leverage the significant benefits of capital growth and high rental yields the UK market has to offer. From buy-to-let landlords with just a few properties to property funds and institutional investors considering large-scale PRS schemes, property remains an attractive option for many, especially considering lower returns from other investment options in recent years.

Here at Connells Investor Services we work with a range of investors, helping them get the best return from their property investment. From sourcing opportunities including off plan, standing stock, new or second hand property, tenanted portfolios and land, to managing negotiations and providing detailed research and RICS valuations, our work ensure investors are getting the best return from their property portfolio.

Whatever the size of investment, be it a small number of properties or a scheme worth millions, the same rules of best practice property investment apply. Look for a location where the rental market is producing good yields, and where property prices are increasing. Taking a national, rather than regional or localised, view of opportunities will further boost the potential of any portfolio and is an essential component of large-scale investment planning which we deliver for our clients here at Connells Group.

From a seller’s perspective, we work with owners on disposing of residential property portfolios whilst the rental market and capital values are balanced, before values become too high and yields less attractive.

Knowing when and where to invest in property can be a challenge but the rewards of getting it right are certainly worth it.

The housing market
The current housing market is, and has been for some time, characterised by over demand and under supply of property. Greater availability of mortgages and schemes like Help to Buy have boosted individual buyer confidence but the number of homes available has not matched their enthusiasm and this has driven up house prices. Equally, frantic activity by investors chasing down the best yields has had an impact on rising prices.

The investment community remains fiercely competitive in property hotspots, while Government efforts to boost the supply of good quality rental accommodation through initiatives like Build to Rent and the housing debt guarantee scheme have peaked interest in new-build PRS schemes.

With demand for rental accommodation showing no signs of abating, understanding the cyclical, tiered nature of the property market, as well as the delicate balance between the rental market and capital values, is vital to making effective property investment decisions.

Property hotspots
Although property in the Capital remains popular, rising prices in London have had a detrimental impact on yields which are now just 2%-3%. This is drawing savvy investors’ attention to other large UK cities. Indeed, here at Connells Group we are working with investors in locations including Birmingham, Leeds, Manchester, Bristol, all of which offer excellent yields of between 6%-7%.

There are now opportunities for the investment community in funding new-build PRS schemes in these locations. With recent reports that the London property market may be starting to cool, property investors are seeing huge opportunities in catching the wave of the UK’s second tier of major cities.

For example, Connells Group recently brokered the sale of an entire development off plan in Birmingham for £15.7m which will complete in March 2015. Additionally, we recently completed a tenanted portfolio of 62 units in Birmingham for £7m and are currently working on another a £70m project in the Midlands for over 600 units and a large tenanted block of apartments in Manchester for £15m. Our client database is extensive including major plc developers, smaller regional house builders, pension funds and high net worth individuals.

In three to five years time, it is likely that locations like Liverpool, Newcastle, Milton Keynes and Swindon will provide purchasers with the best investment opportunities, which is why we work on a national rather than regional basis to provide customers with best practice advice. With the right advice and knowledge of the housing market and its trends, there is never a bad time to invest in property. Location is key and knowing which areas will provide the best returns to guarantee success.

The Connells Group describes companies and brands within the Connells Limited group of companies. Connells Limited is registered in England and Wales under company number 3187394. Registered Office is The Bailey, Skipton, North Yorkshire, BD23 1DN. VAT Registration Number is 500 2481 05. For the activities of advising on regulated mortgages and non-investment insurance contracts, Connells Limited is authorised and regulated by the Financial Conduct Authority. Connells Limited’s Financial Services Register number is 302221.